Accounting Enrollment, Hiring Increase

But schools struggle with capacity issues.

CPAs
looking to hire talented young accounting grads as well as students
preparing to graduate need to know what their competition looks
like. The AICPA’s 2011 Trends in the Supply of Accounting
Graduates and the Demand for Public Accounting Recruits,
which was released in May, identifies key trends in accounting
enrollment and graduation at colleges and the demand for those
prospects by accounting firms of all sizes.

The
report contains the results of two separate surveys—one is for
colleges, and the other is for hiring firms. The surveys have been
conducted on an ongoing basis since 1971. The information contained
in this report is based on surveys conducted at the end of 2010.

On
the demand front, hiring is back on the upswing after decreasing
from 2007 to 2008. In 2007, the total number of accounting hires was
36,111. That dropped to 25,488 in 2008 but climbed to 33,321 in
2010. A large portion of that increase was in firms with fewer than
10 CPAs on staff. Firms of that size increased their hiring
projections from 11,432 in 2008 to 16,342 in 2010 (see Exhibit 1).

In
terms of the types of positions CPA firm new hires were recruited to
fill across firms of all sizes, accounting and auditing still
commanded a narrow majority at 51%; followed by taxation at 25%;
other at 16%; and information technology at 8%.

The
accounting and auditing share of new hires was down from 60% in
2007, with the declines coming from firms with 50 or more CPAs.
Hiring of new CPA graduates likewise decreased for information
technology (down 5 percentage points from 13%). Tax showed a slight
increase (2 percentage points) with the strongest gains coming from
firms with fewer than 10 CPAs, while the largest growth since 2007
was in the “other” category.

The
percentage of overall firms expecting to hire the same or more new
accounting graduates than last year also is up—to 89% from 74% when
the question was asked in 2008.

There
is some bad news for interns, however. The percentage of firms
hiring summer and/or winter interns decreased from 62% in 2008 to
44% in 2010. Only 26% of firms anticipate eventually turning 91% to
100% of those interns into full-time employees, and 54% plan to
bring on more than half of their interns full time (see Exhibit 2).
These numbers should be a wake-up call to students who assume they
will be offered a job from the firm where they interned, warned
Scott Moore, AICPA senior manager–College & University
Initiatives. Interns should be more proactive during their
internships to show their accounting abilities, drive and
communications skills, he said.

INCREASED
ENROLLMENT, REJECTIONS

Overall,
accounting student enrollments were up 6%, from 212,834 in 2008 to
226,108 in 2010. This is a sharp increase from 10 years ago, when
total enrollment was 152,885.

One
noteworthy change is the increase in the percentage of qualified
students that AACSB (Association to Advance Collegiate Schools of
Business) accounting-accredited colleges rejected based on
limitations in available seats—from 16% in 2008 to 20% in 2010.

“That
tells us the schools have a capacity issue. Students want to attend
those schools, but we don’t have the classes for them to sit in,”
Moore said. “This tells a story of why it is important for us to do
things to help fuel the pipeline of accounting professors. We can
encourage people to go into the profession, but those efforts are
fruitless if there’s no one there to teach them.”

While
the percentage of women among accounting graduates earning either a
bachelor’s or master’s degree had been slightly higher than men in
the past two reports, men were once again in the majority in 2010 at 52%.

ADVANCED DEGREES

The
number of students enrolled in master’s degree programs continues to
rise—to 29,464 in 2010 from 22,291 in 2008. This has led to a
corresponding increase in the share of new employees with master’s
degrees hired by firms—37% in 2010 compared with 26% in 2008. This
has grown steadily from a 14% share for master’s graduates in 2000
(see Exhibit 3). The trend toward hiring master’s graduates is
strong among firms of all sizes (see Exhibit 4).

Moore
attributes this trend to the 150-hour education requirement that has
been adopted by most states and is encouraging many schools to offer
master’s degrees in accounting. While a master’s degree is not
necessary to meet this requirement, many students find it more
attractive because it takes one year to complete a master’s in
accounting versus two years for an MBA. Graduates with master’s
degrees receive starting salaries that are approximately 10% to 20%
higher than the starting salaries of those with only bachelor’s
degrees. Moore also said that evidence shows that promotions to
manager and partner and to corporate managerial positions are
increasingly going to individuals with master’s degrees.

In
general, it seems as though the CPA pipeline is continuing to grow,
along with the level of education new hires are bringing to the
table. Firms and new grads alike can arm themselves with this
knowledge to determine the best way to stand out either as a
candidate or a prospective employer.